Lean Enterprises

CHAPTER 6
 What is Lean Production

Lean production idea is to

manufacture the kinds of units considered
necessary, at the time considered necessary
and in quantities considered necessary. This
is to get rid of needless intermediate and
finished product inventories. The essential
idea of lean production came from assembly
line manufacturing methodology developed
by Toyota Production System (TPS) for
automobiles.
Lean production is beyond techniques and
approaches. It is a mindset both for
employees and manages that centers on
riddance of waste and lessening of
variability in all processes. Most lean
production model could also be applied to
service sector.
 What is Lean Thinking?
 The original lean thinking was credited to
henry Ford and his Ford Production System
(FPS) in the early 20th century. In 1937 when
Toyota was established, an engineer by the
name of Taiichi Ohno was sent by the
company to be trained in the principle and
approach initiated by FPS.
 Ohno has extended his knowledge of the FPS
by adding principles and approaches that
enhanced its effectiveness and later became
Toyota production System (TPS).
 Five Core Principles of Lean Production

1. The values in a production system must

be described coming from the viewpoint
of the customers for each product of
family
2. Every production stage must be assessed
using its contribution to value creation.
Non-added value activities should be
removed
3. The value-creating series of stages must
be structured in a firm and integrated
 Five Core Principles of Lean Production

4. Instead of organizing production to

push finished goods to customers
products pulled by the customers must
be the motives for planning, organizing
and scheduling upstream production
activities
5. All members of the organization must
practice perfection using continuous
improvement
 Waste Elimination

The key principle behind lean

thinking is valuing the point of view
of customers. This means if the
customers do not find a product or
service valuable, they will not be
willing to spend money in exchange
for it.
 Three Board Categories on the Types of Waste in
a Production System

1. Muda – This s Japanese term for no-value added

production activities which could be wasteful. The
context of value came from the perspective of
customers. Customers are not willing to spend their
money for non-value added activity
2. Mura – This type of waste is related to irregularity
of the process. The process of JIT is used to lessen
the uncertainty and irregularity in the production
process
Three Board Categories on the Types of Waste in
a Production System

3. Muri – This is the waste that

comes from overburden and
unreasonableness. Reduction from
this waste could be done through
better standardization of the
production processes.
 Another Breakdown of the many Types of Waste

a) Overproduction – in order to maximize the use of

production capacity, organizations ought to make
good schedules of the production of products
b) Setup time – it does not produce any output.
c) Processing time – is the time necessary to
manufacture a product. Basically product price is
based on its market value and not on processing time
therefore the latter is considered as waste.
Another Breakdown of the many Types of Waste

d) Waiting time – production lead time

is increased when a product is in
queue due to unavailability of
equipment or other resources.
e) Transportation – the value of the
product does not increase due to its
internal transportation among the
production facility, warehouses and
retail locations.
 Another Breakdown of the many Types of Waste

f) Movement – poor lay out, work and process design

may result to unnecessary movement of raw
materials and components inside a production
facility which does not create value for the product.
g) Inventory – to maintain a minimum amount of
inventory for smooth production process. Any extra
inventory in a production facility adds waste
because of extra storage and handling
requirements.
Another Breakdown of the many Types of Waste

h) Poor quality – any product or

component produced not based from
specifications are considered
scrapped or wasted. In addition,
resources utilized in making the
poor-quality product are also wasted.
 Components of Lean Production System

1. Pull Production System – a pull system is a

production system that utilizes customer demand
as the prime motive for production planning to
maximize the use of production resources.
2. Push Production System – the push system
centers on maximizing the use of production
capacity and depend on estimated customer
demand.
 Components of Lean Production System

3. Small Batch Sizes – a batch is a

quantity of products that are
manufactured together. Small batches
are advantageous due to reduced
average level of inventory.
4. Short Setup Times – small lots are
advantageous to operations, but to the
disadvantage of increasing set up. A
setup is a group of activities to change
or readjust the process between
 Components of Lean Production System

5. Just-in Time Inventory – known popularly as

JIT, its objective is to make the correct amount of
inventory accessible at the right time.
6. Uniform Production Planning – the lean
production system is advantageous to be used
during the time that production conditions are
stable. High fluctuation I demand needs either
higher inventory or the ability to change the
production capacity and schedule quickly.
 Components of Lean Production System

7. Continuous Improvement or Kaizen –

kaizen means continuous improvement. The
main concept is to create quality defects. In order
to achieve this concept, the practice of quality at
the source is being practiced.
8. Close Supplier Relationships – lean system
functions with low levels of capacity slack and
inventory, companies must create close
relationship with their supplies.
 Components of Lean Production System

9. Multifunctional Work Force – under the

lean production system, workers are trained to
perform several tasks at the same time.
10. Five S – under the lean production system, the
“five S” principles is utilized to produced a more
organized workplace. The five S’s consists of seiri
(sort), seiton (straighten), seiso (shine), seikitsu
(standardize), and shitsuke (sustain).
 The FIVE S Terms

 Sort  Separate needed from

unneeded items and
discard unneeded.
 Neatly arrange what is
 Straighten
left with the place for
everything in its place.
 Shine
 Clean and wash the
workplace and make it
shine.
 The FIVE S Terms

 Standardize  Establish schedules and

methods for performing
the cleaning and sorting.
 Create the discipline to
 Sustain
perform the first four S
practices so that
everyone understands,
obeys, and practices the
rules when in the plant.
 Components of Lean Production System

11. Visual Controls – visual controls or

ardon are indicators that are situated in
plain sight of all employees in order to
quickly and easily comprehend the
condition and performance of the work
system.
12. Preventive Maintenance - under the
lean production system, there is little
slack or buffer inventory between work
stations and any unplanned downtime
 Components of Lean Production System

13. Value Stream Mapping – under

the lean production system, value
stream mapping (VSM) is an essential
component. It can be initial point to
assist management, engineers,
production associates, suppliers and
customers alike to identify waste and
their causes.
New Advances in Lean Production
 Technology in Lean Production

 In production facilities today fresh types of

automated reasoning, learning and control are being
employed. One example is the expert systems that
make use of intelligent rules to make logical
decisions to answer a specific problem or control an
operation or machine: advanced search logarithms to
explain complex optimization problems and
intelligent agents that execute tasks like machine
scheduling, material transfer, and Web auction
building.
Lean Production and Six Sigma= Lean Six Sigma

 Lean Six Sigma is a

combination approach using
lean production and six
sigma. It centers on
improving process flow and
speed plus enhancing the
quality.
 Five Different Laws for Lean Six Sigma

1. The Law of the Market –

customers are critical to quality
because they define quality and is the
highest priority for improvement.
2. The Law of Flexibility – the more
the process is receptive and flexible
to adopt changes, the better the
progress of the project
implementation is.
 Five Different Laws for Lean Six Sigma

3. The Law of Focus – this can be

interpreted as main causes of delay of
activities originating from just 20% of
activities thus enables a faster refocus
during the reorientation phase.
4. The Law of Velocity – higher the
number of works in progress (read
unfinished tasks) the lower is the
speed of progress due to various
 Five Different Laws for Lean Six Sigma

5. The Law of Complexity and Cost

– the bulky of production is against
the foundation of Lean Manufacturing
principles. The bulk, complex
manufacturing process and product
and service specifications contributes
to render the offerings redundant.